ATLANTA, July 27, 2017 (GLOBE NEWSWIRE) -- UPS (NYSE:UPS) today announced earnings per share of $1.58 for the second quarter of 2017, an increase of 11% versus the same period in 2016. The improved earnings per share was due to 7.7% higher revenue. All three business segments generated more profitable product mix, improved yields and better management of operating costs.

Consolidated Results

2Q 2017

2Q 2016

Revenue

$15,750 M

$14,629 M

Operating profit

$2,216 M

$2,038 M

Currency-neutral operating profit*

$2,330 M

Diluted earnings per share

$1.58

$1.43

“UPS generated great year-over-year revenue gains in the second quarter and we produced solid earnings per share growth, consistent with our plans,” said David Abney, UPS chairman and CEO. “We continue to invest in our network to expand our capabilities, our market presence and our global reach.”

For the total company in 2Q 2017:

Revenue increased 7.7%, currency-neutral revenue* jumped 8.9%.

Revenue increased in all segments and major product categories, as expanded customer demand spread across the company’s broad product portfolio.

Operating profit was up 8.7% to $2.2 billion driven by strong performance in the U.S. Domestic and Supply Chain and Freight segments.

The favorable year-over-year 2Q EPS comparison includes benefits of about $0.10, primarily from fuel and workers’ compensation.

Year-to-date capital expenditures to support investment strategies were $2.0 billion.

This year, UPS has paid dividends of nearly $1.4 billion, an increase of 6.4% per share over the prior year, rewarding shareowners with continued strong dividend yield.

As of June 30, 2017, the company has repurchased 8.4 million shares for more than $900 million, reaffirming its commitment to return cash to shareowners.

The Domestic segment benefitted from growing demand for ecommerce deliveries, which fueled an 8.1% increase in revenue over 2Q 2016. The U.S. consumer increasingly prefers to shop online and UPS is taking advantage of this trend through its unique portfolio of delivery solutions and industry-leading customer-facing technology.

2Q 2017

2Q 2016

Revenue

$9,745 M

$9,015 M

Operating profit

$1,395 M

$1,233 M

For the U.S. Domestic segment in 2Q 2017:

Revenue improved $730 million over 2Q 2016 as ecommerce drove higher demand for UPS Air and Ground products.

Next Day Air and Deferred Air shipments climbed 6.4% and 11% respectively, as customers continued to select UPS’s quick and convenient solutions.

Revenue per piece increased solidly across all products and was up 3.0% in total, as the company benefited from base-rate pricing actions and higher fuel surcharges versus 2Q 2016.

The International segment generated solid top-line improvement with increased demand for cross-border shipments. Export shipments grew across all UPS regions, as customers took advantage of UPS’s expanded portfolio, improved time-in-transit and industry-leading customs brokerage solutions. The International segment also made several announcements to expand its capacity and local-market presence.

2Q 2017

2Q 2016

Revenue

$3,163 M

$3,077 M

Operating profit

$583 M

$613 M

Currency-neutral operating profit*

$697 M

For the International segment in 2Q 2017:

Operating margin was industry leading at 18.4%, and operating profit was $583 million, including anticipated currency headwinds of $114 million.

Robust export growth continued at 12% led by Europe and Asia. All regions of the world contributed to the expansion.

The segment reported a revenue increase of 2.8% over 2Q 2016, up 8.3% on a currency-neutral* basis.

During the quarter, UPS announced an exclusive partnership with Expo 2020 Dubai, created an innovative alliance with S.F. Express – a market-leading Chinese logistics company, and acquired Nightline Logistics, which solidified local market leadership in Ireland.

“The Supply Chain and Freight segment again showed good momentum this quarter as the teams in each business unit are executing on revenue quality improvements combined with structural cost reduction programs,” Abney said. “This performance shows balanced improvement across all business units as revenue and operating cost initiatives strengthen core performance.”

2Q 2017

2Q 2016

Revenue

$2,842 M

$2,537 M

Operating profit

$238 M

$192 M

Revenue increased 12% over 2Q 2016 as the company deeply aligned with preferred customers, strengthened revenue management initiatives and market conditions improved across all business units.

All business units contributed to segment operating profit expansion of 24%, which included a one-time benefit.

Outlook

The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments, which would be included in reported (GAAP) results and could be material.

“Second quarter results were in line with our expectations and we are pleased with the progress on our strategic initiatives,” said Richard Peretz, UPS chief financial officer. “Looking at the second half of the year, our core business performance will continue to produce solid results.”

The company’s full-year 2017 adjusted earnings per share guidance includes the following:

Second half currency headwinds and continued costs for strategic initiatives will weigh on results.

One less operating day in 3Q 2017 compared to 3Q 2016 will contribute to relatively flat diluted earnings per share (EPS) growth.

The tax rate is expected to be 35% for the second half of 2017 and excludes 4Q 2016 tax savings of approximately $0.05 per share.

UPS reaffirms 2017 adjusted diluted EPS guidance to be between $5.80 and $6.10, which includes about $400 million, or $0.30 per share of pre-tax currency headwinds.

Conference Call Information

UPS CEO David Abney and CFO Richard Peretz will discuss second-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, July 27, 2017. That call is open to others through a live Webcast. To access the call, go to www.investors.ups.com and click on “Earnings Webcast.”

About UPS

UPS (NYSE:UPS) is a global leader in logistics, offering a broad range of solutions including transporting packages and freight; facilitating international trade, and deploying advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the web at ups.com or pressroom.ups.com and its corporate blog can be found at longitudes.ups.com. To get UPS news direct, follow @UPS_News on Twitter.

Forward-Looking Statements

Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic directions, prospects and future results, involve certain risks and uncertainties.

Reconciliation of GAAP and non-GAAP Financial Measures

We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures, including, as applicable, "as adjusted" operating profit, operating margin, pre-tax income, net income and earnings per share. The equivalent measures determined in accordance with GAAP are also referred to as "reported" or "unadjusted.” Additionally, we periodically disclose free cash flow as well as currency-neutral revenue, revenue per piece and operating profit.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results and assessing our ongoing performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation award results.

Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.

Currency-Neutral Revenue, Revenue per Piece and Operating Profit

We supplement the reporting of our revenue, revenue per piece and operating profit with similar non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package and Supply Chain and Freight businesses on a currency-neutral basis.

Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived current period local currency revenue, revenue per piece and operating profit are then multiplied by the average foreign exchange rates used to translate the comparable results for each month in the prior year period (including the period over period impact of foreign currency revenue hedging activities). The difference between the current period reported U.S. dollar revenue, revenue per piece and operating profit and the derived current period U.S. dollar revenue, revenue per piece and operating profit is the period over period impact of currency fluctuations.

Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and Operating Profit

(in millions, except Per Piece amounts):

Three Months Ended June 30

2017 As-Reported (GAAP)

2016 As-Reported (GAAP)

% Change (GAAP)

Currency Impact

2017 Currency-Neutral (non-GAAP)

% Change (non-GAAP)

Average Revenue Per Piece:

International Package:

Domestic

$

5.99

$

6.07

-1.3

%

$

0.36

$

6.35

4.6

%

Export

29.22

31.36

-6.8

%

1.60

30.82

-1.7

%

Total International Package

16.31

16.70

-2.3

%

0.91

17.22

3.1

%

Consolidated

$

10.75

$

10.57

1.7

%

$

0.15

$

10.90

3.1

%

Revenue:

U.S. Domestic Package

$

9,745

$

9,015

8.1

%

$

-

$

9,745

8.1

%

International Package

3,163

3,077

2.8

%

170

3,333

8.3

%

Supply Chain & Freight

2,842

2,537

12.0

%

14

2,856

12.6

%

Total revenue

$

15,750

$

14,629

7.7

%

$

184

$

15,934

8.9

%

Operating Profit:

U.S. Domestic Package

$

1,395

$

1,233

13.1

%

$

-

$

1,395

13.1

%

International Package

583

613

-4.9

%

114

697

13.7

%

Supply Chain & Freight

238

192

24.0

%

-

238

24.0

%

Total operating profit

$

2,216

$

2,038

8.7

%

$

114

$

2,330

14.3

%

Six Months Ended June 30

2017 As-Reported (GAAP)

2016 As-Reported (GAAP)

% Change (GAAP)

Currency Impact

2017 Currency-Neutral (non-GAAP)

% Change (non-GAAP)

Average Revenue Per Piece:

International Package:

Domestic

$

5.85

$

5.99

-2.3

%

$

0.32

$

6.17

3.0

%

Export

28.67

30.90

-7.2

%

1.63

30.30

-1.9

%

Total International Package

15.88

16.54

-4.0

%

0.90

16.78

1.5

%

Consolidated

$

10.63

$

10.48

1.4

%

$

0.15

$

10.78

2.9

%

Revenue:

U.S. Domestic Package

$

19,280

$

18,099

6.5

%

$

-

$

19,280

6.5

%

International Package

6,221

5,991

3.8

%

340

6,561

9.5

%

Supply Chain & Freight

5,564

4,957

12.2

%

24

5,588

12.7

%

Total revenue

$

31,065

$

29,047

6.9

%

$

364

$

31,429

8.2

%

Operating Profit:

U.S. Domestic Package

$

2,471

$

2,335

5.8

%

$

-

$

2,471

5.8

%

International Package

1,112

1,187

-6.3

%

233

1,345

13.3

%

Supply Chain & Freight

417

339

23.0

%

1

418

23.3

%

Total operating profit

$

4,000

$

3,861

3.6

%

$

234

$

4,234

9.7

%

United Parcel Service, Inc.

Selected Financial Data - Second Quarter

(unaudited)

Three Months Ended

June 30

2017

2016

Change

% Change

(amounts in millions, except per share data)

Statement of Income Data:

Revenue:

U.S. Domestic Package

$

9,745

$

9,015

$

730

8.1

%

International Package

3,163

3,077

86

2.8

%

Supply Chain & Freight

2,842

2,537

305

12.0

%

Total revenue

15,750

14,629

1,121

7.7

%

Operating expenses:

Compensation and benefits

8,105

7,738

367

4.7

%

Other

5,429

4,853

576

11.9

%

Total operating expenses

13,534

12,591

943

7.5

%

Operating profit:

U.S. Domestic Package

1,395

1,233

162

13.1

%

International Package

583

613

(30

)

-4.9

%

Supply Chain & Freight

238

192

46

24.0

%

Total operating profit

2,216

2,038

178

8.7

%

Other income (expense):

Investment income and other

14

8

6

75.0

%

Interest expense

(111

)

(94

)

(17

)

18.1

%

Total other income (expense)

(97

)

(86

)

(11

)

12.8

%

Income before income taxes

2,119

1,952

167

8.6

%

Income tax expense

735

683

52

7.6

%

Net income

$

1,384

$

1,269

$

115

9.1

%

Net income as a percentage of revenue

8.8

%

8.7

%

Per share amounts:

Basic earnings per share

$

1.59

$

1.43

$

0.16

11.2

%

Diluted earnings per share

$

1.58

$

1.43

$

0.15

10.5

%

Weighted-average shares outstanding:

Basic

872

886

(14

)

-1.6

%

Diluted

876

890

(14

)

-1.6

%

United Parcel Service, Inc.

Selected Operating Data - Second Quarter

(unaudited)

Three Months Ended

June 30

2017

2016

Change

% Change

Revenue (in millions):

U.S. Domestic Package:

Next Day Air

$

1,752

$

1,637

$

115

7.0

%

Deferred

1,020

899

121

13.5

%

Ground

6,973

6,479

494

7.6

%

Total U.S. Domestic Package

9,745

9,015

730

8.1

%

International Package:

Domestic

621

621

-

0.0

%

Export

2,420

2,326

94

4.0

%

Cargo and Other

122

130

(8

)

-6.2

%

Total International Package

3,163

3,077

86

2.8

%

Supply Chain & Freight:

Forwarding and Logistics

1,893

1,659

234

14.1

%

Freight

753

693

60

8.7

%

Other

196

185

11

6.0

%

Total Supply Chain & Freight

2,842

2,537

305

12.0

%

Consolidated

$

15,750

$

14,629

$

1,121

7.7

%

Consolidated volume (in millions)

1,189

1,132

57

5.0

%

Operating weekdays

64

64

-

0.0

%

Average Daily Package Volume (in thousands):

U.S. Domestic Package:

Next Day Air

1,395

1,311

84

6.4

%

Deferred

1,253

1,129

124

11.0

%

Ground

13,019

12,489

530

4.2

%

Total U.S. Domestic Package

15,667

14,929

738

4.9

%

International Package:

Domestic

1,619

1,599

20

1.3

%

Export

1,294

1,159

135

11.6

%

Total International Package

2,913

2,758

155

5.6

%

Consolidated

18,580

17,687

893

5.0

%

Average Revenue Per Piece:

U.S. Domestic Package:

Next Day Air

$

19.62

$

19.51

$

0.11

0.6

%

Deferred

12.72

12.44

0.28

2.3

%

Ground

8.37

8.11

0.26

3.2

%

Total U.S. Domestic Package

9.72

9.44

0.28

3.0

%

International Package:

Domestic

5.99

6.07

(0.08

)

-1.3

%

Export

29.22

31.36

(2.14

)

-6.8

%

Total International Package

16.31

16.70

(0.39

)

-2.3

%

Consolidated

$

10.75

$

10.57

$

0.18

1.7

%

United Parcel Service, Inc.

Supplemental Analysis of Currency and UPS Freight

Currency Neutral Revenue Per Piece

(unaudited)

Three Months Ended June 30

Currency Neutral

2017

2016

% Change

Currency

2017*

% Change

Average Revenue Per Piece:

International Package:

Domestic

$

5.99

$

6.07

-1.3

%

$

0.36

$

6.35

4.6

%

Export

29.22

31.36

-6.8

%

1.60

30.82

-1.7

%

Total International Package

$

16.31

$

16.70

-2.3

%

$

0.91

$

17.22

3.1

%

Consolidated

$

10.75

$

10.57

1.7

%

$

0.15

$

10.90

3.1

%

* Amounts adjusted for period over period foreign currency exchange rate and hedging differences

Currency Neutral Revenue

(unaudited)

Three Months Ended June 30

Currency Neutral

2017

2016

% Change

Currency

2017*

% Change

Revenue (in millions):

U.S. Domestic Package

$

9,745

$

9,015

8.1

%

$

-

$

9,745

8.1

%

International Package

3,163

3,077

2.8

%

170

3,333

8.3

%

Supply Chain & Freight

2,842

2,537

12.0

%

14

2,856

12.6

%

Total revenue

$

15,750

$

14,629

7.7

%

$

184

$

15,934

8.9

%

* Amounts adjusted for period over period foreign currency exchange rate and hedging differences

Currency Neutral Operating Profit

(unaudited)

Three Months Ended June 30

Currency Neutral

2017

2016

% Change

Currency

2017*

% Change

Operating profit (in millions):

U.S. Domestic Package

$

1,395

$

1,233

13.1

%

$

-

$

1,395

13.1

%

International Package

583

613

-4.9

%

114

697

13.7

%

Supply Chain & Freight

238

192

24.0

%

-

238

24.0

%

Total operating profit

$

2,216

$

2,038

8.7

%

$

114

$

2,330

14.3

%

* Amounts adjusted for period over period foreign currency exchange rate and hedging differences

Freight Selected Operating Data - Second Quarter

(unaudited)

Three Months Ended

June 30

2017

2016

Change

% Change

LTL revenue (in millions)

$

652

$

600

$

52

8.7

%

LTL revenue per LTL hundredweight

$

23.62

$

23.47

$

0.15

0.6

%

LTL shipments (in thousands)

2,633

2,540

93

3.7

%

LTL shipments per day (in thousands)

41.1

39.7

1.4

3.7

%

LTL gross weight hauled (in millions of pounds)

2,762

2,556

206

8.1

%

LTL weight per shipment (in pounds)

1,049

1,006

43

4.3

%

Operating weekdays

64

64

-

0.0

%

United Parcel Service, Inc.

Detail of Other Operating Expenses - Second Quarter

(unaudited)

(in millions)

Three Months Ended

June 30

2017

2016

Change

% Change

Repairs and maintenance

$

392

$

383

$

9

2.3

%

Depreciation and amortization

562

555

7

1.3

%

Purchased transportation

2,443

2,070

373

18.0

%

Fuel

616

505

111

22.0

%

Other occupancy

264

245

19

7.8

%

Other expenses

1,152

1,095

57

5.2

%

Total other operating expenses

$

5,429

$

4,853

$

576

11.9

%

Earnings Per Share and Share Data - Second Quarter

(unaudited)

Three Months Ended

(amounts in millions, except per share data)

June 30

2017

2016

Numerator:

Net income

$

1,384

$

1,269

Denominator:

Weighted-average shares

867

881

Deferred compensation obligations

1

1

Vested portion of restricted units

4

4

Denominator for basic earnings per share

872

886

Effect of dilutive securities:

Restricted units

3

3

Stock options

1

1

Denominator for diluted earnings per share

876

890

Basic earnings per share

$

1.59

$

1.43

Diluted earnings per share

$

1.58

$

1.43

Detail of shares outstanding as of June 30, 2017:

Class A shares

177

Class B shares

688

Total shares outstanding

865

United Parcel Service, Inc.

Selected Financial Data - Year to Date

(unaudited)

Six Months Ended

June 30

2017

2016

Change

% Change

(amounts in millions, except per share data)

Statement of Income Data:

Revenue:

U.S. Domestic Package

$

19,280

$

18,099

$

1,181

6.5

%

International Package

6,221

5,991

230

3.8

%

Supply Chain & Freight

5,564

4,957

607

12.2

%

Total revenue

31,065

29,047

2,018

6.9

%

Operating expenses:

Compensation and benefits

16,236

15,591

645

4.1

%

Other

10,829

9,595

1,234

12.9

%

Total operating expenses

27,065

25,186

1,879

7.5

%

Operating profit:

U.S. Domestic Package

2,471

2,335

136

5.8

%

International Package

1,112

1,187

(75

)

-6.3

%

Supply Chain & Freight

417

339

78

23.0

%

Total operating profit

4,000

3,861

139

3.6

%

Other income (expense):

Investment income and other

29

25

4

16.0

%

Interest expense

(213

)

(187

)

(26

)

13.9

%

Total other income (expense)

(184

)

(162

)

(22

)

13.6

%

Income before income taxes

3,816

3,699

117

3.2

%

Income tax expense

1,274

1,299

(25

)

-1.9

%

Net income

$

2,542

$

2,400

$

142

5.9

%

Net income as a percentage of revenue

8.2

%

8.3

%

Per share amounts:

Basic earnings per share

$

2.91

$

2.71

$

0.20

7.4

%

Diluted earnings per share

$

2.90

$

2.69

$

0.21

7.8

%

Weighted-average shares outstanding:

Basic

873

887

(14

)

-1.6

%

Diluted

877

892

(15

)

-1.7

%

United Parcel Service, Inc.

Selected Operating Data - Year to Date

(unaudited)

Six Months Ended

June 30

2017

2016

Change

% Change

Revenue (in millions):

U.S. Domestic Package:

Next Day Air

$

3,416

$

3,212

$

204

6.4

%

Deferred

1,990

1,814

176

9.7

%

Ground

13,874

13,073

801

6.1

%

Total U.S. Domestic Package

19,280

18,099

1,181

6.5

%

International Package:

Domestic

1,233

1,195

38

3.2

%

Export

4,742

4,529

213

4.7

%

Cargo and Other

246

267

(21

)

-7.9

%

Total International Package

6,221

5,991

230

3.8

%

Supply Chain & Freight:

Forwarding and Logistics

3,720

3,245

475

14.6

%

Freight

1,462

1,349

113

8.4

%

Other

382

363

19

5.2

%

Total Supply Chain & Freight

5,564

4,957

607

12.2

%

Consolidated

$

31,065

$

29,047

$

2,018

6.9

%

Consolidated volume (in millions)

2,376

2,273

103

4.5

%

Operating weekdays

128

128

-

0.0

%

Average Daily Package Volume (in thousands):

U.S. Domestic Package:

Next Day Air

1,356

1,289

67

5.2

%

Deferred

1,249

1,163

86

7.4

%

Ground

13,016

12,606

410

3.3

%

Total U.S. Domestic Package

15,621

15,058

563

3.7

%

International Package:

Domestic

1,648

1,558

90

5.8

%

Export

1,292

1,145

147

12.8

%

Total International Package

2,940

2,703

237

8.8

%

Consolidated

18,561

17,761

800

4.5

%

Average Revenue Per Piece:

U.S. Domestic Package:

Next Day Air

$

19.68

$

19.47

$

0.21

1.1

%

Deferred

12.45

12.19

0.26

2.1

%

Ground

8.33

8.10

0.23

2.8

%

Total U.S. Domestic Package

9.64

9.39

0.25

2.7

%

International Package:

Domestic

5.85

5.99

(0.14

)

-2.3

%

Export

28.67

30.90

(2.23

)

-7.2

%

Total International Package

15.88

16.54

(0.66

)

-4.0

%

Consolidated

$

10.63

$

10.48

$

0.15

1.4

%

United Parcel Service, Inc.

Supplemental Analysis of Currency and UPS Freight

Currency Neutral Revenue Per Piece

(unaudited)

Six Months Ended

Currency

June 30

Neutral

2017

2016

% Change

Currency

2017*

% Change

Average Revenue Per Piece:

International Package:

Domestic

$

5.85

$

5.99

-2.3

%

$

0.32

$

6.17

3.0

%

Export

28.67

30.90

-7.2

%

1.63

30.30

-1.9

%

Total International Package

$

15.88

$

16.54

-4.0

%

$

0.90

$

16.78

1.5

%

Consolidated

$

10.63

$

10.48

1.4

%

$

0.15

$

10.78

2.9

%

* Amounts adjusted for period over period foreign currency exchange rate and hedging differences

Currency Neutral Revenue

(unaudited)

Six Months Ended

Currency

June 30

Neutral

2017

2016

% Change

Currency

2017*

% Change

Revenue (in millions):

U.S. Domestic Package

$

19,280

$

18,099

6.5

%

$

-

$

19,280

6.5

%

International Package

6,221

5,991

3.8

%

340

6,561

9.5

%

Supply Chain & Freight

5,564

4,957

12.2

%

24

5,588

12.7

%

Total revenue

$

31,065

$

29,047

6.9

%

$

364

$

31,429

8.2

%

* Amounts adjusted for period over period foreign currency exchange rate and hedging differences

Currency Neutral Operating Profit

(unaudited)

Six Months Ended

Currency

June 30

Neutral

2017

2016

% Change

Currency

2017*

% Change

Operating profit (in millions):

U.S. Domestic Package

$

2,471

$

2,335

5.8

%

$

-

$

2,471

5.8

%

International Package

1,112

1,187

-6.3

%

233

1,345

13.3

%

Supply Chain & Freight

417

339

23.0

%

1

418

23.3

%

Total operating profit

$

4,000

$

3,861

3.6

%

$

234

$

4,234

9.7

%

* Amounts adjusted for period over period foreign currency exchange rate and hedging differences